Comment by kragen
4 months ago
Yes, but nobody has found a more effective way to build infrastructure in poor countries. State capitalism as described is how infrastructure development happened in Indonesia, Malaysia, Taiwan, Hong Kong, Korea, Japan, Vietnam, Thailand, etc.
The fact that infrastructure was built under state capitalism does not demonstrate the superiority of central planning, only that capital accumulation occurred despite intervention, often financed by prior scarcity, foreign savings, or coerced transfers; absent market prices and entrepreneurial profit-and-loss, the state cannot know whether the infrastructure created was the most value-productive use of scarce resources, only that concrete and steel were poured.
I think it demonstrates the increased variance of central planning. The Congo Free State was also centrally planned, and so was the Holocaust, the Holodomor, the Armenian Genocide, Suharto's mass murder of suspected PKI sympathizers, etc. But the expected outcome for poor countries is that they stay poor and don't develop into industrialized export giants the way my laundry list of countries did.
Higher variance isn’t a redeeming feature when the mechanism that generates it lacks rational calculation in the first place. Central direction can occasionally coincide with growth in poor countries because initial scarcity leaves many wasteful paths that still raise output, but that doesn’t establish a positive expected value
5 replies →
Catlover76 asks in a [dead]ed comment, "And China, right?" It's a reasonable question. It's debatable whether the infrastructure of the parts of China I didn't mention was built by state capitalism or by a straightforwardly Communist system of production, so I only mentioned the more clear-cut cases.
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